Government to unlock stalled projects?
Chile's president Kast has signed the National Reconstruction Plan bill for social and economic development that includes measures to propel investment and the generation of employment.
Further development of the mining sector is a key focus of the legislation. The bill is subject to congressional approval. Tax incentives, such as a gradual reduction of the corporate tax rate from 27% to 23%, and 25-year tax stability agreements for investments over US$50 million, are anticipated to stimulate mining project development.
The tax stability agreement echoes the creation of Decree DL600 by the government of Augusto Pinochet in 1974, which paved the way for Chile to become a global copper powerhouse. More recently, it reflects the RIGI investment incentive scheme, put in place in Argentina by President Javier Milei, to provide tax stability for investments of more than $200 million, intended to make the country a more significant force in the mining industry.
A study completed by Santiago consulting group GEM Mining Consulting forecasts that the new law will see Chile increase it annual copper production to 6.7Mtpa from 5.7Mtpa in a scenario without the reform. It also forecast that lithium production would increase to 650,000tpa of lithium carbonate equivalent from 540,000tpa LCE.
"This is the cumulative equivalent of producing 13.8Mt of additional copper and 1.3Mt of additional lithium carbonate between 2026 and 2046," said GEM's study. GEM said a lower corporate tax rate makes investment projects more attractive, increases company cash balances and gives them greater capacity for reinvestment. Together with tax stability, an important factor for projects with elevated payback times and long lives, the measures will likely make future investments more likely, particularly for marginal projects.
In addition to reinstating a fully integrated tax system, the reform also eliminates double taxation on distributed profits. GEM estimates that the stimulation measures will result in the mining sector providing a 1.06% boost to GDP and an additional $1 billion each year to the treasury, for a total of $15.3 billion in the 2026–2046 period in nominal terms, compared with an estimated $6.6 billion under the current system.
To support the mining investment process, the reform also seeks to modify Chile's permitting system, particularly for environmental permits, to reduce permitting timelines and increase project predictability.
"Given that a significant portion of delays in the mining sector stems from the interplay between permitting and judicialization, these changes could have a significant impact on the realisation of the investment portfolio," said GEM. The reform will seek to do this by reducing the number of iterations within the SEIA environmental management instrument, placing limits on the invalidation of favourable resolutions, enhancing technical oversight by the SEA environmental authority, and streamlining processes associated with the National Monuments Council.
GEM identified potential risks to the reform's success. These include the potential for conflict with the prevailing royalty scheme, which is not affected by the reform, and the possibility of tension arising between the proposed invariability and the current variable mining royalty regime. Reform of the permitting system could be perceived as a weakening of environmental control and access to legal remedies.
The reform focuses on large-scale mining, and so tensions could arise among small- and medium-scale miners who do not benefit. However, small- and medium-scale miners will be able to benefit from the $1.4 billion annual employment credit, which aims to support small companies. The status of lithium as a strategic commodity in Chile and the role of various state agencies in the sector could overestimate the impact the reform will have on the sector.
CochilcoIn December 2025, the state copper agency Cochilco published a report on the portfolio of mining projects that could be developed in the 2025-2034 period, which represents an aggregate investment of $104.5 billion, the highest amount in the past 11 years. Of these, 81% were brownfield projects aimed at expanding existing operations. Some 41% of the projects were under development or detailed engineering.
Cochilco said 41% of the projects had a high degree of certainty of execution, 40% were potential, and 19% were probable or possible. The bill aims to move more projects into the execution phase and address a point made at the 2026 CRU World Copper Congress in Santiago in early April. CRU said that despite the huge opportunity created by rising copper demand and stagnant production growth, "Western miners are yet to commit to new production".
CRU suggested that "governments hold the key to unlocking supply" and initiatives such as Kast's bill clearly seek to do that. CRU said structural barriers are holding back new supply, and identified about 700,000tpa of new greenfield capacity in Chile stalled by social and regulatory barriers, while almost 3Mtpa of brownfield capacity is stalled.
"Chile's brownfield pipeline is large but heavily unrealised," said CRU. CRU highlighted the fact that most uncommitted capacity never reaches production, with the challenge being executability rather than investibility. CRU data showed that 40-75% of probasble projects converted to production while just 15-25% of possible projects did. "The copper mining industry has a problem of commitment," CRU said.
DL600 RIGI CRU World Copper Conference 2026
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